Correlation Between Thai President and Thai Union

Can any of the company-specific risk be diversified away by investing in both Thai President and Thai Union at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thai President and Thai Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thai President Foods and Thai Union Group, you can compare the effects of market volatilities on Thai President and Thai Union and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thai President with a short position of Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and Thai Union.

Diversification Opportunities for Thai President and Thai Union

-0.07

Correlation Coefficient

Thai President  Thai Union

Good diversification

The 3 months correlation between Thai and Thai is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group and Thai President is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thai President Foods are associated (or correlated) with Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of Thai President i.e., Thai President and Thai Union go up and down completely randomly.

Pair Corralation between Thai President and Thai Union

Assuming the 90 days trading horizon Thai President Foods is expected to generate 0.21 times more return on investment than Thai Union. However, Thai President Foods is 4.72 times less risky than Thai Union. It trades about 0.01 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.12 per unit of risk. If you would invest  19,950  in Thai President Foods on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Thai President Foods or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Thai President Foods  vs.  Thai Union Group

Thai President Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai President Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Thai President is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Thai Union Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Union Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Thai President and Thai Union

The main advantage of trading using opposite Thai President and Thai Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, Thai Union can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thai Union will offset losses from the drop in Thai Union's long position.

The idea behind Thai President Foods and Thai Union Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.